From point through density valuation to individual risk assessment in the discounted cash flows method

Marcin Dec ()

No 35, GRAPE Working Papers from GRAPE Group for Research in Applied Economics

Abstract: We review the developments and practice of the discounted cash-flow method in finance with an intermediate goal of presenting parsimonious methods of generating density valuation rather than point forecasts. Our ultimate aim is to select, propose and discuss some density-based risk measures that may be used by appraisers and investment analysts when conducting DCF valuation for broad group of heterogeneous (by risk appetite) final users or investors. Such a toolbox may be applied directly by the latter group without necessity to rely on aggregated point valuations and recommendations.

Keywords: discounted cash-flows; density forecasts; downside risk measures; Monte Carlo simulation (search for similar items in EconPapers)
JEL-codes: G11 G12 G17 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2019
New Economics Papers: this item is included in nep-ore and nep-rmg
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Persistent link: https://EconPapers.repec.org/RePEc:fme:wpaper:35

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